We've got one item on our agenda first off, please require pension action value report.

Uh, and then we have a couple things into closed session.

So I'm gonna go ahead and assume I'm kicking this over to Jim or Matthew and McCall, Matthew, whichever wants to grab the microphone.

All right.

Okay, so we're gonna present the actual report.

So we have Nita and Heidi from GRS, and they're gonna kind of go over the report, and then afterwards we have Mark Shigowski and David Sears from UBS, they're our investment portfolio managers, and they're just gonna talk a little about a little bit about the investments as well.

So uh Mita and Heidi, if you guys are uh on and can hear us, uh, we'll let you get started.

Our video is disabled for some reason.

Okay, so the host has the level songs.

All right, thanks, Mark.

We'll get that to take care of it.

To share my screen.

I don't know.

Yes, you might show you how they can see that's a lot of technological advanced.

Um I don't know, we have to accept it, I guess.

Somebody accepts it on that side of the table.

So mayor, is this an hour?

Yes.

Okay, thank you.

I need to be oriented.

Can everybody see it?

Yes.

Okay.

Well, uh, good afternoon, everyone.

Uh, my name is LesMeads well and presenting with me today is my associate.

Heidi Barry.

We are from Gabriel Rotterdam Company, and we are the actuaries for the police and fire retirement fund.

Heidi and I are very pleased to have the opportunity to present the September 30th 2025 actual evaluation results of the retirement fund.

If we can turn to slide two, Heidi.

The purpose of the annual actual evaluation is twofold.

One is to determine the employer contribution rates for both the police group as well as the fire group for the fiscal year ending September 30th, 2027.

And the second very important reason is to measure the funding progress in relation to the actual cost contributing.

And that's just a fancy way of saying what portion of the actual recruit liabilities, which means the liabilities associated with service that the police members and the fire members have already earned as of September 30th, 2025.

What portion of those liabilities are covered by what we call the funding value of assets.

Okay, this graph is meant to kind of give you an idea of part of the benefit of prefunding a system.

So if you look at the green bar that's increasing over time, those are your benefits being paid out of the system.

That's what we would call a typical pay as you go.

And benefits are actually ready to be paid the system is paying it as it um occurs.

In a pre-funded plan, at the very start of the plan, you're receiving employee and employer contributions, even though no benefits are being paid, and that money is being invested.

So when you look at the horizontal line, which is the level payment below that horizontal dotted line is your employee and employer contributions coming in.

So at the beginning of the plan, you can see to the left, not paying out as much in benefits as the contributions that are coming into the system.

When you look at the section above the dotted horizontal blue line and the green lines, that is the amount of investment income that we are expecting to be able to help offset the employee and employer contributions to pay for benefits and expenses being paid out.

So that's why it's really important to pre-fund.

Now when we perform the actual evaluation, there are a lot of different variables that we need to take into account when we're calculating the employer contributions and the rest of the results that you see in that actual valuation report.

We need to look at the census data, the uh asset data, and then um, well, in terms of the census data, we're looking at your active members who could potentially receive a benefit in the future.

We're looking at retirees and beneficiaries who are currently receiving benefits, and then terminated vested members who may have maybe entitled to a benefit sometime in the future.

The other three things we're looking at are benefit provisions, what the system is actually planning on paying its members when they retire, the actual assumptions, we need to make assumptions about things because we don't know what's going to happen in the future.

So we have to make assumptions about when people retire, when people will die, how many people will quit and will they be eligible for benefit, or will they just receive their refunded contributions?

A lot of different assumptions that we need to make to uh determine the cost, and then we need an actual funding method, and this is how you pay or the system pays for those benefits over time.

So there were no benefit provision changes, actual assumption or funding method changes.

So I'm gonna focus on the census and asset data that we received as of September 30, 2025.

So first, when we look at the active number, we do have it split out between the police and the fire funds.

So for police, there was a big change in the active member population from 2024 to 2025.

Uh, you can see the number went from 136 active members to 153, and this does include drop numbers as well.

The payroll increase from 11.6 million to 12.5 million.

That was a pretty large increase of about 8.4 percent overall.

And then when you look at the fire group, you can see a little bit different.

We see that the number actually decreases from 2024.

So we had 168 active numbers, and that decreased to 163, and the total payroll actually decreased slightly from 13.6 million to 13.3 million.

So those become important later on when we get into the actual results.

Moving on to the uh retiree and beneficiary populations for the police fund, there were four new either retirees from active retiree from vested or new beneficiaries.

We have four people come on with 272,000 in the annual benefits, five people were deceased, and it removed about 50,000 from annual rules.

So we see an overall increase in the annual benefits of about three percent, and it goes from 6.8 million to 7 million with about just over 200 uh participants or recipients.

For the fire fund, we see nine new retirees again from either active tested or as survivor of a retiree who has disease, and that annual benefit added is 537,000, and we had six people removed or deceased with 131,000.

So again, we see a about a 4% increase in the annual benefits being paid out, and just under 10 million.

Now we're gonna look at the asset data.

Um, the market value reported as of September 30, 2025 was in row B, that's 224 million.

Um that was actually a good return.

If you look in row E1, we had a 19 million dollar investment uh gain for the year, and that was about 9.3% of a market return.

Our assumption is six and a quarter percent.

Our assumption is six and a quarter percent, so we did better than expected for the year.

So that additional gain that the system receives, we smooth that out over four-year period rather than just using the market value because the market value from year to year can be pretty volatile, and smoothing it out over four years reduces some of that volatility.

So in section F, you'll see four rows there.

Again, we're smoothing out means and losses over four years.

So in that 2025 column, we have gains of a quarter of the gains and losses from 2022 to 2025 reflected here.

And you'll notice um, so for F1 against the current year, that's 1.7 million.

But you'll notice if you look in row F4, that 9.5 million is a portion of the 2022 loss that was incurred, and this is the last year.

2025 is the last year that that loss is going to be recognized.

So going forward, it's gone.

So we have a total in row F5 a 1.3 million dollar gain that we recognize for 2025.

But if you look in the future, I'll go back to 2026 to 28 in a minute to explain the big difference there.

So we end up in G5 with a funding value of 203 million, which is about 21 million less than our market value of 224.

That 21 million is a gain that we expect to be recognized over the next three years.

So if we look at 2026, we are currently sitting on a 10.9 million dollar investment gain that needs to be recognized.

We obviously don't know what 2026 is gonna look like yet, and that will determine ultimately what that row F5 is going to look like, whether it's gonna have additional gains or losses in there, but right now it's the fund is in a good position.

Um, where if you compare it 2025, it's significantly lower, and again, that's because of that 2022 loss disappearing.

So now I'm gonna pass it back to you, Nita to go over uh the actual employer contribution rates.

Okay, uh, thank you, Abby.

So there are two components to the computed employer contribution rate.

One is what we call the normal cost of benefits, and that's the cost of the active member accruing an additional year of service rate.

So given that we have some individuals or both the police and fire groups covered under what we call the pre-October one and 2020 12 benefit provisions, they have a different normal cost than those individuals higher on or after October 1st, 2012.

Uh, because of the differing benefit provisions uh between those two uh those two groups.

So if we take a look at the numbers on the left-hand column, the normal cost for a police active member who are covered by the pre-uh 2012 benefit provisions is 25.22 percent in total for those covered by the post, it's 16.09 percent, or a weighted average between the two of 19.32 percent.

Now the members make contributions to the system as well, either three and a half or four and a half percent for the police group on an weighted average, it's 4.13 percent as of September 30th, 2025.

The difference between those two numbers is the cost to the employer for the police group of those active members accruing an additional year of service credit, so it's 15.19% for the fire group, the total normal cost for the pre-2012 uh active members is 50.9 percent for the post-group 24.33 or a weighted average of total of 33.27.

The members, depending upon it, they're pre- or post 2012 buyers contribute either 16.32 percent or four or a weighted average of 8.41 percent.

The difference between the 33.27 and the point four one is the employer portion of the normal cost for the fire group of 24.86 percent.

I'm gonna ask a quick question before you go on.

I just your like your your ampersand um signal there, and this is probably just a really naive question that says there are currently no police members in the pre-2012 group.

But we have we have people that were before, right?

I mean, like you guys were all hired in 2005.

Well, not you, Mark, but you were 2012.

You're probably still free.

So wouldn't they be in that group?

No, that's a that's an excellent question.

And one I've always actually struggled with.

Um for the pre for the pre-2012 group.

I'll see your emails by the way.

Yeah, email as well.

You're sharing your email.

I think heidi is Heidi, you're sharing your email.

Heidi, I think you're showing your email instead of the presentation.

Lucky for us, there was nothing damaging.

You have a lot of unready those, but other things being for the pre-2012 police group, the individuals that had a three and a half percent member contribution rate for whatever reason were called non-contributory, and there was another group that was called contributory that contributed eight point something percent.

Uh I can't remember the exact figure.

There's no individuals that are covered, that's the contributory group we're referring to when we call uh that there's no individuals in that group.

There's actually two versions of the contributory group, one contributing 3.5, and before there were some other lease active members covered by the pre-2012 provision that contributed 8.00 percent for whatever reason, the 8.0 group was called the contributory group, and for reasons I've never fully understood the ones that contribute 3.5 percent was considered the non-contributory group for the pre-2012 provisions.

I know that explanation is clear as mud, um it's as clear as mud for me as well.

I'm not sure why that Orwellian language was used before, but we've just continued that that language 24.

But at the end of the day, we think that all of the pre-2012 police officers are contributing three and a half percent here.

So no one's contributing eight point something percent.

Right.

Okay, okay.

Exactly correct.

Exactly correct.

So in a perfect world, if our assets equaled our actual accrued liabilities, and we had no unfunded accrued liabilities, that would be the employer normal cost would be the contribution rate.

Unfortunately, we do have unfunded actual accrued liabilities for various reasons.

You know, one can be actuarial experience, just wasn't as good as what we expected.

Not this, you know, not just this year, previous years, it's accumulation over many many years.

There might be a benefit change that either increased or decreased the accrued liability that wasn't funded in the past and is funded going forward, but that's another reason that the unfunded accrued liability can go up.

Another reason is the revision of expectations going forward.

So, for example, in the last experience study, an experience study is the study where we take a look over the five or seven-year period, uh you know, the period of time isn't fixed, but generally it's usually anywhere from four to seven years, and we say, Okay, let's take a look and see how the assumptions did versus what we actually thought they were going to do, especially on the demographic side, and say, do we need to revise that going forward?

In addition to that, I didn't mention that the investment return assumption is six and a quarter percent prior to the last experience that we changed.

That assumption was seven percent.

So, to the extent that if we think we're going to earn less money going forward on the assets of the system, that increases the liabilities.

The reason being is for public employer retirement systems, the investment return assumption is used as the discount rate to determine the actual accrued liabilities and hence the unfunded actual accrual liabilities.

So, given the fact that we do have unfunded actual accrued liabilities, currently they're amortized over a 26 year period.

So for the police group, an additional 28.74% of payroll contribution is needed to amortize that unfunded accrued liability.

And for the police group is 34.31% for a total computed employer contribution rate for fiscal year 2027 of 43.93% for the police group and 59.17% for the fire group.

Those are down.

The last valuation for the police group was 46.57.

So that went down to 43.93.

And for the fire group, it was 60.56 in the 2024 valuation declining to 59.17%.

In dollar terms, uh in fiscal year 2027, those percentages sort of compute to roughly about a 5.8 million dollar employer contribution for police, and that's that's an estimate, and roughly about an 8.3 million dollar employer contribution for the fire group.

If we can just slide nine, I think.

So the other reason to perform the valuation was to see how we are how well we're funded versus the liabilities that we've computed for service as of September 30th, 2025.

So for the police group, the value of that actual approved liability is 139 million 65,59, which is the third row of numbers that you can see there.

Of that 139 million, 92.6 million of that liability is associated with individuals that have already left active employment, those are our retirees and beneficiaries, and that does not include drop members for the fighter group, the total accrued liability is about 213 million, the third row there, 144 million of which is associated with individuals already in payment status.

So roughly two-thirds of our liabilities are associated with individuals already in payment status.

If you take the funding value of assets for the police and fire groups, so the 73.1 million for the police group and 129.9 million for the fire group, we subtract that from the liabilities, we get the unfunded accrued liability of 65.8 million for the police group and 83 million for the fire group.

If we divide our assets by our liabilities, we get what we call the total percent funded.

So for the police group, that's 53%, and for the fire group that's 61% in total, it's 58% for the entire fund.

Those numbers, while they are lower than we would like to see, it's it's encouraging that they are higher than the last year.

So 53% for the police group last year was 51%, and for the fire group, 61% last year was 57%.

So that's a very encouraging uh valuation result this year.

You know, we have a question.

Please.

What are the um standard percent funded?

So if we're at 53,61, what would what would the normal typical funding look like percentage ratio?

Um, I wish I could tell you that there is a normal or typical funded ratio.

Um it is all across the board, and generally speaking, I think public safety systems are generally less well funded than uh what I'll say systems covering general employees or um, let's say teacher employees, but you can have a wide range of funded ratios, like for example, in statewide systems.

For example, the statewide systems in the state of Missouri, the funded ratios there range from anywhere in the 50s and 60s to very close to 100% for whatever statewide systems that I'm quite familiar with.

So there really is no norm.

Um is there not a standard framework for that kind of thing?

There's not a standard framework for a few reasons.

One of the reasons being the funded ratio or funded ratio is dependent upon the actual assumptions that the system uses, and what I'll suggest is for the most part, I think we're quite comfortable with the assumptions that are in place for um the retirement fund.

The one area that in the experience study would probably look at a little bit is pay increases, and that's one of the reasons that when I suggested that public safety funded ratios have been under more strain, I'll suggest than other occupations.

Is it's been a very challenging period, let's say over the last five years for public safety occupations, and I'm probably you don't need me to tell you that to entice individuals to uh in the recruiting environment or to to keep police or firefighters on the rolls.

We've seen significant pay increases for those two types of occupations.

We've seen it as well for general employees and teachers, but not to the extent for for public safety.

Secondarily, is the stress of those jobs over the last five years might make it that they're retiring sooner than they otherwise would have, uh for example, than the other occupations, so that that's where you can't make any uniform judgment between the funded ratios for, for example, for Columbia and another municipality or political subdivision of the state of Missouri or in any other state.

So there's no way for us there's just no way.

I mean, sorry, Christina answer your question or ask your question.

There's just no way it's just uncalculable to have a standard framework here, is what you're telling me.

And so the other question I had was on slide seven.

Um, I don't know if we want to switch topics or what, but um or I guess I have the it under a different slide, but you were talking about the actuarial underfunding can be caused by different things, such as expertise funding wasn't set at the right amount, blah blah all those reasons you gave.

But one of the things I didn't hear was like um uh when you don't want to ask this, um when the expertise isn't what it's is expected, you you reference the experience um experience uh five-year study um to conduct and validate any type of assumptions, correct?

And so when we do those type of studies, what would be the difference between that and like an audit that would go in?

Because in your report that you had presented, you said this is specifically not an audit, it is just a report of I don't remember the exact wording, I don't have a report pulled up, but um, that was referenced in the beginning letter, it was very explicit, it wasn't an audit.

So, what would be the benefit of doing that versus having something like um an experience study performed?

Um okay, so I think there's two different questions there.

I don't like and remember using the term audit in the presentation today, and then if I didn't, maybe you can remind me where that where that was used.

I think the audit is referenced in our annual value, our full annual valuation report.

Uh-huh.

And when we say we don't audit the information provided, what we mean by that is so when we receive the membership information from Matthew and James, we do some smell checks to make sure that the data looks reasonable compared to the prior years.

If we have some some data questions, you know, this paying piece looks a little bit odd, or this date of birth change, or whatever the case may be, but we don't do a full audit of the membership data that's provided to us for the financial statements.

We don't do an audit of the financial statements that are provided to us.

The in that instance, we accept the financials at face value.

Unless there's something obvious in the financials, we say this just can't be right.

We'll come back to the system and say it.

But that's where like your actual auditor of the system would audit the financials.

I don't think they would audit the membership data either.

Um we're just trying to disclose in our main valuation report that we've looked at the reasonability of the data we use for its valuation process, but we have not performed any full audit.

Now I can kind of audit you might be referring to.

He wasn't done.

I kind of want to hear what he has to say.

Yeah, I was gonna talk about the audio.

You don't think you're answering the question you're asking?

I think he might but go ahead.

I want to hear from his perspective.

I say that's why we're still talking.

The the other audit that you might be referring to is an actuarial audit of our work, and that's where another actuary comes in and says, okay, you know, GRS has done these calculations.

Um we are going to audit the results of their calculations to ensure that basically they're not doing something really wrong for lack of a better chart of saying that, and to assess the reasonability of the assumptions used for valuation purposes.

So for example, I've performed actual audits on numerous other systems, generally statewide.

But uh trying to think if I've done uh municipal thing, and I've had recommendations and things of that nature.

Um, and I've had our work at GRS is audited um probably the most in the country.

The reason being is we perform the most public sector actual evaluations in the country.

So um we're very comfortable with our work being audited.

Um so it depends upon you know what the purpose of the actual audit is.

Now the question about the experience study, that's different from an actual audit.

That that's a um a process of saying, okay, you know, every five years or so, let's just make sure that the actual assumptions that are used to develop the liabilities, the contribution rates that we're presenting today are still reasonable going forward.

And I'll give you an example of something that really changed over the last let's say 20 years, and for most public employer retirement systems, if you were to go from the you know 90s to the early 2000s, the very very common investment assumption for evaluation purposes was 8%, and the reason it was eight percent was because of the capital market expectations of the various asset classes looking forward, doesn't matter historical results, it's we go to investment experts, like you'll hear from uh the gentleman today.

We look at other investment experts around the country, we actually keep track of I think it's roughly about 12 to 14, and so you know, based upon how you're investing your assets for the city of Columbia, and their capital market expectations going forward on those various asset classes, is the investment return assumption still a reasonable assumption, and what we've seen over the last 20 years or so is that the capital market expectations, for example, let's say fixed income, fixed income in the early 2000s would have been expected to earn a lot more than it was for example, let's say you know, three or four years ago when interest rates were were almost zero.

So fixed income is one of the asset classes that would have seen probably a very significant decline over that time period at least.

Um we've seen that in the uh domestic equities uh pretty much almost uniformly with the asset classes under considerations.

So that's the purpose of an experience that hopefully I've had the answer to your question, but I'm happy to retry it by that.

I'm ready to move on.

Thanks.

You can go on, Mina.

Okay, thank you.

So given the fact that our calculations are based upon assumptions, we're not arrogant enough to believe that we're gonna get everything exactly right, that all of our assumptions are going to be met moving forward, and that there's no not going to be any deviation between actual experience going forward and um what we assume going forward.

So we try and just give the board some some sense of if something were to happen differently than we expected, what does that actually mean?

So the one the columns I would like you to focus on are the second and third from the right hand side, the total funding value of assets divided by total payroll and the total accrued liability divided by total payroll.

So for the police fund, our assets are roughly about 5.8 times our payroll.

If we were 100% funded, meaning that our assets actually equaled our actual accrued liability, it's 11.1 times payroll.

So if the police fund experienced a 10% asset loss, which remember our starting point isn't zero, so it's not a return of minus 10%.

Our starting point expectation is that the fund will earn 6.25 percent.

So a 10% asset loss in our world would be a market value return of minus 3.75, which is not implausible at all.

If that were to happen, if we had a 10% asset loss, that's basically 58% of payroll for the police fund.

And if you look at the number below for the fire fund, that's 97% of payroll.

That's almost like a full year's worth of payroll.

So one year of asset loss, if you wanted to pay it off immediately, it's almost like you would have to say, okay, we're gonna pay the firefighters this year, and we're gonna make an additional 100% of payroll contribution into the system as well.

Now, obviously, we don't ask the system to finance that asset loss over one year period, we amortize it over the 26-year period, but it just gives a sense of volatility or the potential volatility of the uh employer contribution rate.

The one of the other reasons I talked about public safety type retirement systems having more challenges, I'll say it that way, then uh teacher and retirement systems is police and fire retirement systems generally have earlier retirement conditions, and generally speaking, higher benefit multipliers than say a general system or a teacher system, which means that you have to have more assets into the system with the pre-funding to finance those liabilities, it's it's just the nature of the beast, but the more assets you have to finance those benefits, the potential there is for more volatility in both the funded ratio as well as the computed employer contribution.

So we just try and make the board aware of that.

Um, because we think that's important.

A very just if we look at the funding ratio on the left-hand side, those are very encouraging statistics.

Um at least with respect to the trend.

So if you look at the funded ratio, and let's go on the market with assets in 2021 for the police fund, we were at 58.

In 2022, that would down to 46 percent in one year.

So that's a significant decline of funding ratio, and that's the uh fiscal year 2022 return that Heidi was talking about.

We have to recognize 25 percent of that experience, but you can see in less than well, in three years, that 46 percent if we were to use the market value of assets to um be the denominator for the funded ratio, we're back up to 55, so that's encouraged.

Similarly for the fire fund, we were at 61 percent back in 2021.

It went down to 48 percent, which was quite discouraging, but we're all the way back up to 67 percent within a four-year period, so those are very encouraging statistics, and with that, I'm going to ask for the next slide, and I think we're back to that.

Okay, just gonna spend a few more minutes summarizing everything we kind of talked about a little bit here.

So for the police group, a total computed employer contribution rate, the fiscal year 2027 is 43.93 percent, which is a decrease from the fiscal year 2026 contribution rate of 46.57, and there are a few reasons why that number decreased.

So, first, we know that the system had better investment experience than what we expected.

Um, it was higher than the six and a quarter percent assumption that we have.

Another big reason for the change is in particular for the police.

I mentioned earlier that that total payroll increase by 8.4 percent.

That was much higher than our assumption of 2.75 percent.

So we were developing a percent of payroll contribution, that denominator was a lot higher than we expected it to be, which brought the rate down.

Um, and then we did recognize the system did receive an additional 500,000 dollars in employer contribution for fiscal year 2025, and that was also a contributor to the decrease, and this was partially offset by higher individual pay increases than expected, but overall we saw a gain for the police group, and um already had mentioned that over time once that unfunded piece is gone, or if theoretically that funded piece goes away, the normal cost is going to decrease to that post 10.1 2012 benefit plan, and even without the even with an unfunded once the system is composed of all 10.1 2012 post employees, that rate will be what uh that second-tier rate that we talked about a little bit earlier.

Is um and then for the fire group, the 2000 the fiscal year 2027 player contribution rate decreased from 60.56 to 59.17, and again, due to the investment experience being better than what we expected, we did end up with the fire side seeing more retired deaths than expected, um, lower payroll pay increases than expected, and again an additional 500 employer contributions was received in fiscal year 2025.

So all of those uh contributed to lowering that employer contribution rate.

And we did take that into account when we developed the employer contribution rates.

So that additional money has been reflected in the rates that we've shown from the chart.

Um the second bullet in September 30 in the September 30, 2021 valuation, the amortization period was extended from 25 years to 30 years.

So if that had not occurred, um, and the amortization period had stayed at 25 years in the 2021 valuation, then that amortization period would have been 21 years for this 2025 actual valuation.

So we decided to calculate what the employer contribution rate would look like using a 21 year amortization period rather than the 26 years that is hasn't been adopted.

And those numbers would be 48.28% for police and 64.35% for fiber.

And then finally, we talked a lot about the experience study.

So it's been about five years, and we anticipate that we're going to recommend to the board that we perform an experience study prior to the September 30, 2026 actual valuation.

And with that that is all of our prepared comments, but we'd be happy to take any other questions.

So Betsy, question.

So I actually have two questions.

The first one is what is an experience study.

Oh, I'm sorry.

And uh we did talk about a little bit.

So the experience study is where we will take a look at all of the economic and demographic assumptions that we are currently using, and we'll compare that to the actual experience that the system has over the past five years.

So if we think that an assumption needs to be adjusted to maybe be closer to what the experience is actually shown, we will make any recommended recommended changes after performing this or while like performing the experience study.

Okay, thank you.

It looks at our assumptions to make sure they're still valid, or whether or not a change might need to be made.

And you don't take it in too much detail since you're gonna do it again.

So Betsy has another question.

I have another question for you.

So I know Christina asked, um, I think she was trying to ask, like, like what, or at least I want to ask, what should we be aiming for for these pension funds?

Because it seems like most of us would like 100%.

Well and yet standard.

Okay, and so if we're doing that, why are you recommending that we can decrease our contributions?

I mean, it's great that we've had some good years of return.

Okay, that's what I did.

Doesn't actually decrease it.

Okay.

Let me let me let me try and uh address that one.

So the contribution rates that we've showed, we're not recommending that the contribution rates decrease.

The contribution rates that we've showed are a reflection of given the current amortization period and your current assumptions.

That is the result of the calculations.

One of the reasons that we included the additional calculation of reducing the amortization period for the September 30th, 2025 valuation from 26 years down to 21 years, was for that exact reason that given the current funded status of both the police and fire groups.

We think it would be reasonable to shorten that amortization period and if the employer contribution rate back up to the higher contribution rates over the 21-year amortization period.

So I think I I wouldn't say that we're recommending the contribution rates that we've showed on the previous slide, those are the contribution rates that would be computed based upon already adopted methodology for the valuation.

We're we're we're more than happy when we see our uh systems contribute contribution amounts above and beyond the computed contribution based upon adopted procedures so far, especially in situations where the funded status is also just much lower than we would like it to be.

Okay, thank you.

Okay, move on to investments.

Yep, yep.

You want to introduce them, Jim.

Uh yeah, Mark, David.

Um, you guys can go ahead and start your presentation now.

You know, I don't know if we ever heard your answer to the question before.

Maybe there's a moment we can circle back some other time.

Probably, but we don't have two years.

I know.

Still like here.

Okay.

Yes, you hear me?

Yeah.

Can you hear me?

Yeah.

Jim, can you hear me also?

Yes.

And just so you know, you guys got about 10 minutes, so we're kind of on a hard deadline.

So we're going to shorten up.

So we're going to short up the agenda.

Thank you to the council for having us present or over the case of fire tension on the investment side.

We were going to do a market overview and then go into the pension.

Why don't we do the quick overview?

Just want anybody want to talk about the markets at all, or what is that now?

I think we should just go into the portfolio.

Okay.

All right.

So on the portfolio, a couple things.

Um I think uh one of the questions was asked by one of the council people is you know, why is the funding where it is?

And we go through a couple different things.

One is we're gonna put up a chart data as of right now, bottom right hand corner.

It shows the sources of portfolio value.

So we started working with the pension in the city around uh late 2009, and you can see when we got on onto the pension in 2009.

The top line is the growth of the portfolio, the police and buyer pension, the bottom line are the contributions and the withdrawals from the pension since 2009.

So you can see there's a bit of drawdown of the actual dollars coming out of pension since 2009, but the growth has been thankfully the markets and our expertise have grown the portfolio.

Prior to 2009, the pension fund was invested 15 percent in stocks and bonds or 50 percent cash, which caused a big drag on the earnings.

That was a decision long before Matthew was there, and long before two other finance department uh heads.

That was not a decision by anybody sitting in the room.

The decisions being made now from this portfolio is stabilized it actually.

And also the other thing is we would go back to the agenda.

Uh times are standard.

So when we talk about contributions into the portfolio, there's two things going on.

Um the contribution to the city has made a one million dollar deposit in 2025, nothing yet in 2026.

But because of the way the portfolio was put together pre-2009, uh, actually, there's money coming out of the portfolio every so often to meet benefits.

That's number one.

So year to date, the pension has been paid out 350,000 to meet benefits to the police and buyer personnel.

And in 2025, the city did make a one million dollar contribution, but withdrew 665,000 okay.

So for the newer members of the council, and this has nothing to do with MEDA or us, the way the portfolio was set up and is not abnormal, is the current police and fire employees are paying benefits into those contributions, but those contributions do not hit this portfolio that we're investing.

It's kind of a closed portfolio this at this point, other than deposits from the city.

Those benefits are collected and actually are paid to current pensioners in the portfolio.

So part of the underfunding has to do with the benefits not going in, they benefit payments withheld not going into the portfolio.

We have a question on that.

So there's a couple things going on here.

Okay, so David, you want to kick it off?

Yeah, I guess just to dig in a little bit to the actual portfolio.

So this here is on the left-hand side, I'll try to make it bigger.

This is the current most recent investment pool, uh, 238 million as of the end of May.

And it's uh it's diversified.

Uh these are all the investment categories.

I mean, where from broadly fixed income and bonds, equity of stocks, um then even within the stocks is diversified amongst US, international, and then different types of stocks.

You can't see it within this page, but uh there is an index funds as well as what we call active managers, so it's a deliberate mix to get to a target allocation, and that target allocation has been meant to um you know grow the assets and achieve the actual rate of return, and of all investment fees, the most uh the more recent performance.

This is just a snapshot of the of what's currently been going on.

Uh the calendar year, so this includes the the market drop in April, and then the rebound.

Um so there was a significant drop, but even with that first five months of the year, the portfolio is up about 10 million, 9.6 million or 4.19%, and then since the fiscal year start of uh call it 10.1 of last year, portfolio is up 14.3.

Um, you know, still more time to go, but uh Vita had mentioned the actual rear return to six and a quarter percent, the fiscal year year to state return is six point three nine percent so far.

Um just quickly show you what more look at the portfolio.

I had mentioned the different managers.

So the previous page was looking at the types of investments.

This page looks at the uh the allocation to third party investment managers or professionals that invest those in those different categories.

So I just mentioned with a mixture of low cost indexes as well as active managers, and our job is to monitor all of this to make sure that value is being added to the to the section.

We still have four minutes.

Um we could uh touch on high level view of our our our outlook on the markets, unless there's more specific questions about what we covered so far.

One we can cover the market in about two and a half minutes on one or two pages real fast.

Yeah, go ahead.

Okay, so David, go to the FOMO page.

Okay, so this may look odd to you, but uh in our business like other ones we use acronyms to describe what's going on in the market.

So the biggest question is what's going on geopolitically, what's going on in this country?

Why is the stock market still going up and what's likely to happen in the next six months to a year?

Going into the midterm election is the biggest one.

So we sat around, and I don't have to remember we came out of uh COVID a few years ago.

Um the stock market went up very quickly, and the term was quite coined for FOMO, which is the fear of missing out.

So as the market was going up really quickly, investors were fearful that they were missing out on the returns because their neighbors and friends and sold their portfolios up you know 10%, 15%.

So the money flowed in as the economy started coming out of COVID was FOMO.

Where you are right now is FOMO, which is fear of missing out on peace.

Okay, so people are going into the market of combination of FOMO, and very concerned that as soon as peace is declared in Iran or say some more moves are straightened out, the market is going to go up as with call to repeat brown.

So we're at the stage of fear of missing out on peace.

All right, the last one is the fact that earnings are very real.

So if you think about when we had liberation day uh last year, about this time, the market went down real quickly.

The city, every major corporation, every professional association went back to their books of business and their businesses and said, Let's eject any manufacturing that we do, it's losing money that's not profitable.

They got rid of it.

The city tightened up its belts, okay, and professional organizations did the same thing and started firing people, and so what happened was revenue started increasing in this year, and the earnings are very strong.

Throwing also look at um AI, which is artificial intelligence, making manufacturing making our business easier, and profitability is going up on top of that, and those companies supplying it are actually making money, not like what happened in 1999 and 2000 with the tech bubble.

So the pyramid of fantastic earnings momentum is on the next slide to show it.

So there's barge targeting.

All right, so what we're seeing is you look at earnings starting 2021, which is COVID, and then it popped out, and earnings started going 10%, 12%.

We're looking for the full year this year for earnings and the SP 500 to be up 20%.

Yes, that's concentrated in the tech stocks, not just the magnetic seven.

We're seeing stocks going up 10, 20, 30 percent, and that earnings we think are going to continue into next year at 12%, which is above the norm.

So the uh fantastic earnings momentum and the peace dividend are helping us uh bring this market forward.

It could take one thing that we don't know about to stop this, but right now this is what's driving the market.

Any questions on that?

Sum it up.

No, I think that was it.

Thank you for the quick market rundown in two minutes.

Appreciate that, right?

Three acronyms covers it.

So I think I'll throw yeah.

I'll just have one last before we go into our post session.

You know, you talked about um our employer contribution.

We started that a couple years ago about putting the additional million dollars into this.

You mentioned that that's going into the portfolio.

So is that still your recommendation that we continue that practice?

Because you have it, obviously, the actuary have it in their assumption, and you have it in your forecasting this that it's still happening.

So that's really a city call.

Okay, that is.

I want Crystal Hall.

The constraints are the constraints are really the budget of the city and what the city can afford to put into the pension at this point.

Again, the problem with the pension started potentially um over two decades ago.

Okay, mayor two decades.

Thanks for that non-answer, Mark.

No, I appreciate it.

I know you couldn't give us advice.

I was just had a try.

Okay, not a problem.

All right.

Well, I'm gonna go ahead and close this portion of it.

If you guys want to shut down the Zoom on this, thank you all so much.

Appreciate uh your your working with our staff on this.

Um, all right, so thanks so much, and have a good uh holiday July 4th.

Okay, take care.

Thank you.

I'll make a motion.

Uh I moved that the city council of the city of Columbia, Missouri to immediately go into a closed meeting and conference room 1A1B of City Hall to discuss legal actions, causes of action, or litigation involving a public governmental body and confidential or privilege communications between a public governmental body, its representatives and its attorneys pursuit to section 610 02.0211 of the revised statutes of Missouri and preparation, including any discussions or work product on behalf of a public governmental body or its representatives for negotiations with employee groups pursued to section 610 610.0219 of the revised statutes of Missouri.

Can I have a second?

Second.

All right, Vera.

Yes, Jeffy, yes.

Nick, yes, Christina, yes, Betsy, yes, Barbara, yes, Valerie.

Yes, all right.